ASB got the finance world talking this week, with their new Back My Build 1.79% variable home loan rate. It’s the biggest thing that’s happened in the NZ housing market in weeks! So if you’re looking to build your dream home or purchase a home and land package, here’s some valuable advice to make your next big financial move.
How ASB is helping Kiwi's into homes
Aimed primarily at First Home Buyers, and at energy efficient, healthy homes, ASB at looking to put a sizeable dent in the sustainable housing market in NZ. Let’s get really clear about what’s on offer.
- A variable rate of 1.79% for up to 3 years. A variable rate means customers are also free to make lump sum payments or fix their rate at any time
- Around 1000 new build loans in the next 12 months
- A $2000 cash-back reimbursement if you can evidence green design build, through a partnership with New Zealand Green Building Council (6 Homestar rated home or higher)
- ASB’s lending criteria and terms apply
- This floating rate is subject to change at any time
- You can read through the details yourself here
How Quantum is helping Kiwi’s into homes
The Home Loan process is BIG, it’s complicated, there’s lots going on, and it can be very overwhelming. It doesn’t matter what age you are, if you’ve never built before, I always say, you’ll be an expert at the end of it, but it’s a massive learning process as you go through it. Some people love it! Some people find it very stressful. But a good adviser, if you’ve got them on your team from the beginning, can take a lot of that stress away.
Here at Quantum, we’ve done hundreds, possibly thousands of these, so we know the process and we can help guide and support you, all the way through.
Quantum is the brain-child of two Waikato-based businessmen. Dan and I put our heads together, using our respective experiences (11 years in Banking, 20 years in business, and 15 years in the property market, as lenders, property developers, landlords, and project managers) and built a kind-of one-stop-shop for finance and insurance that’s been building relationships here in the Waikato for many years now. Our team of qualified experts has over 308 years of experience and counting, in banking, lending, finance, and insurance. We’ve grown to almost 30 humans that are all willing to go above and beyond for every client. Every time.
How much does engaging an Adviser cost?
We often find that people had no idea that engaging with a financial adviser is a FREE service. You get expert, individual, care and support from the moment you decide you need us. For FREE. We receive instructions from you, then we act, liaise, negotiate, and mediate for you so that you don’t have to worry about:
- Dropping the ball on any of the communication needed with your builders, the council, the valuers, the agents, the insurance advisers, the banks/lenders, the everybodys!
- the hows, the whys, and the whens
Again, for FREE! And that happens because it’s the banks (the lenders) that pay us for our services, not you. We’ve built our world on the value of relationships, not the value of the bottom line, and that’s why our service is second-to-none.
Why you should engage us today?
There is nothing more valuable than a personal connection. A personal understanding of your world, your family, and your circumstances. That’s what makes having your own adviser a game-changer! Those personal conversations allow us to use our skill-set to provide you with a sounding board, a confidant, a friend, a cheerleader, or even a backbone. You’re our priority, it’s that simple.
Though money is a very personal thing, it doesn’t have to be stressful. We’ll get all up in your business, and ask questions that may feel uncomfortable. Questions designed to get you weighing options, considering habits, and making decisions. But if you allow us to gain that intimate understanding of your whys, whats, hows, and future plans, we can then do 4 valuable things:
- Help you plan not just for your todays, but your tomorrows too
- Support you to make more informed decisions based on your future plans
- Make sure you’re having the right kind of conversations with the right people
- Help you to protect your family, home, and business
Build easy with Pragma Homes
You can build easy with Pragma Homes turnkey build options and ASB’s 1.79%.
A Turnkey build is where you pay a deposit and then you pay the rest on completion. These builds are generally considered to be a much easier, simpler option for First-Home buyers.
And when lending, the banks will generally treat turnkey builds like an existing home purchase, because in effect you’re buying a completed home. Banks prefer this kind of build because the admin is much simpler.
But not all builders do it, because obviously, they carry all that expense throughout the build process.
There are building companies out there, like Hamilton owned family-run, Pragma Homes, where you can have the security of a beautifully designed, new home via a turnkey build. Committed to providing quality, affordable housing, Pragma house and land packages are a great option if you’re Waikato-based and seriously considering this 1.79% offer!
A traditional progress-payment build is how most building companies operate. You pay a deposit and then regular, progress payments throughout the build process. The lending criteria differs here though. When the bank works out its servicing calculations, they often add-in 10% to cover cost overruns on the build part of the loan, allowing them room to move just in case there are cost overruns, (which there can often be with a build because we’re human and we change our minds about what we want).
But it also means that technically, what you’re able to borrow under a traditional build loan can be restricted, because of that extra 10% on top of what you’re asking for, and it has to meet that criteria to get approval.
What’s cool about the ASB 1.79% rate is, it makes things very cheap throughout that build period. You’ve got the flexibility of staying on that cheap rate for up to 3 years. But be aware, it is variable, so it could change depending on what the bank decides and what the market dictates. Remember, you’re also free to fix it in any time you’re ready.
Do the math
The reason ASB’s rate is so exciting is that traditionally to build your home, you’d be on a higher than normal rate (4.5%), more than double the cost of this new deal! DO THE MATH! You can save thousands here.
To fix or float at 1.79%
Traditional builds generally favour using a floating interest rate. Most banks are currently offering around the 4% rate. Floating can be more expensive, but it’s a smart move as it gives you more flexibility when you draw-down on your build, so you’re only paying interest on the money that you’ve used, but you’re adding to the loan continuously.
So when you’ve come to the end of the build process, you’ve drawn down the money, you need to make some more decisions about what you should be doing next. Should you fix-in for a year? Or 3? For some people, staying on that 1.79%, which you can do for up to 3 years, that could be it! It’s cheap money, it’s flexible, you could be moving within that timeframe, and you won’t have to worry about breaking out of a fixed contract with the bank.
It’s that intimate understanding of what’s going on in your lives, that will enable your adviser to ask the right questions, at the right time, and give you that expert advice to help you make the fix or float decisions. What you decide to do will depend on the market and your personal circumstances.
A young couple might be looking for a longer-term rate because you’re planning a family and you need the stability of knowing what your payments will be over the next few years. Whereas a couple that might be in their 40s and their children are beginning to leave home, they might be thinking they could sell in the next 12 months/two years so they don’t want to commit themselves to a longer period.
A great adviser will help you weigh up your circumstances and what your future might look like by getting you to consider things like:
- What’s coming up for you in the next year or two?
- What do your next goals and dreams look like?
- Are you planning on having a family?
- Buying a new vehicle?
- Making a career change or heading back to school?
- Is this the home for you for the next 5 years, 10 years?
- Or maybe it’s a short-term home?
Because then you’re making a more informed decision about what’s coming up for you in your future, you’re making better decisions about what type of interest rate you should be going with, at what times. Because what’s right for you, right now, isn’t necessarily right for the guys next to you even though technically it’s the same market.
That’s why just ringing and fixing a rate in with a bank, doesn’t give you the personal relationship that you really need.
If you’ve engaged our services from the beginning of that dream of homeownership, then we’ll have an intimate understanding of why you want to borrow the money you’re borrowing, and why you’re looking at the kinds of homes you’re looking at, and we’ll have an understanding about what’s happening in your life. It’s those types of personal, intrinsical conversations that can help you make smarter choices. And as long as you make more good ones than bad ones, you’ll have a better life!
Take advantage of ASB’s great rate! Click here to get in touch with us so we can talk about how we help you start building your dream home now.